Videotron launches wireless network

MONTREAL - Cable giant Videotron ramped up the pressure on its wireless competitors Thursday with the announcement that it will offer 3G service across Quebec by the end of the year.

The long-anticipated move by Videotron, a division of Quebecor Media Inc., is expected to intensify a price war with its main rival Bell Canada as well as Rogers and Telus, which could be welcome news for subscribers looking to reduce their cellphone bills.

Last year the Organization for Economic Co-operation and Development (OECD) said Canadians pay more for wireless service than any of the OECD's 32 other member nations.

Videotron will bundle wireless service with internet, cable and telephony, offering unlimited contracts that allow customers to opt out at any time. Clients will also be able to make unlimited local calls and watch selected television channels on their mobile devices.

The announcement comes at a time when telecom companies are coming under increased scrutiny over pricing and the length of contracts. This past summer, the SeaBoard Group denounced three-year Canadian smartphone contracts, which the firm said were the longest in the world. Videotron president and CEO Robert Depatie says clients have demanded fair pricing and flexibility.

"We asked our clients about their mobile needs and we listened to them and understood their message," he told a news conference in Montreal.

The Convergence Consulting Group says Bell currently holds 39% market share in Quebec, compared with 34% for Rogers and 27% for Telus. Videotron only had a 1.6% share under a wireless leasing arrangement with Rogers but analysts believe that presence could jump to as much as 18%.

"It's clear that the arrival of Videotron represents open warfare with Bell," says Richard Paradis, president of the telecom consulting firm Groupe CIC, who added that "Videotron might be best-placed among the new wireless arrivals."

The company obtained the rights to the wireless spectrum during Ottawa's last spectrum auction in 2008. Videotron offered just over $500 million and its investment will reach $1 billion once installation costs are factored in.

As of last March, the company had nearly 1.8 million cable TV subscribers and 1.2 million internet clients. The company was also providing telephone service to more than 1 million homes and businesses.